Chapter 5: How Do Risk and Term Structure Affect Interest Rates? Flashcards
1
Q
5: Three Factors of Risk Premium
A
2
Q
5: Expectations Theory
A
4
Q
5: Liquidity Premium Theory
A
5
Q
5: Forward Rate
A
7
Q
5: Market Segmentation Theory
A
A theory of the term structure that sees markets for differentmaturity bonds as completely separated and segmented such that the interest rate for bonds of a given maturity is determined solely by supply and demand for bonds of that maturity.
10
Q
5: Spot Rate
A
The interest rate at a given moment.
